Preliminary plan project lighting in India

Introduction

The core idea presented in this plan is a joint venture between Huayi Lighting, based in Zhongshan, PRC and Bombay Electric (BEPS), based in Mumbai, India to develop a project lighting business.

There is an opportunity in India’s fast growing market to offer end to end solutions for residential and commercial projects. We feel that the strengths between these firms can complement each other. For Huayi, a local partnership in India would enable them to access more opportunities in India and Bombay Electric has an opportunity to expand its offering with a wide array of complementary products. Coordination between BEPS and Huayi would be handled by Indo-Global Sourcing Ltd (IGSL), based out of Hong Kong. Exactly how IGSL can add value is outlined in the Marketing and Standard Operating Procedure sections below.

Business Case

BEPS already has several partners in Europe but no direct partner in China. China is the world’s leading exporter and manufacturer of LED lighting by an order of magnitude because of its competitiveness, manufacturing capacity and the sheer range of products that can be produced as seen below:

China’s exports of lighting products are larger than the combined exports of the other 9 countries listed on the chart. To offer competitive lighting solutions, it is natural to seek a partner that can leverage Chinese manufacturing capacity.

Huayi is an ideal partner since it has participated in many international projects including projects in Mumbai itself such as Phoenix Market City located in Lower Parel. The video below shows Huayi’s involvement in the Phoenix Mills project:

It makes sense for the two firms to collaborate particularly in the areas of decorative lighting where Huayi has a distinct expertise.

Potential Scope

India’s consumer market for lamps & lighting in 2022 was approximately USD 336 million.

This can be broken down into three subcategories as shown below:

Consumer lighting market in India (2022)
Category	Revenues in millions of USD
Ceiling Lights & Chandeliers	148.60
Light bulbs & Fittings	160.40
Table & Floor lamps	26.52

This market is expected to grow at a rate of 8.67% according to the report linked above. If we take this growth rate as a median scenario and simulate pessimistic and optimistic scenarios around this median, we get a figure like the one below:

The graph is produced using a few simple statistical assumptions. The key assumptions are:

• A median CAGR of 8.67% as predicted by the Statista report linked above
• The “pessimistic” and “optimistic” scenarios are calculated using a statistical simulation.

The chart above shows a broad, macro view of the market. However, any venture also succeeds and fails on its own terms and a crucial factor in revenue projections will depend on exactly how much of this market is accessible to the proposed venture. In the table below, we use an example year, 2027, and ask project how much revenue this venture could potentially make.The table below shows the outcome from various scenarios:

Revenue projections for 2027 - Millions of USD
Projected Market share	Pessimistic Outcome	Median outcome	Optimistic Outcome
0.5% of Market share	2.65	2.71	2.79
0.75% of Market share	3.97	4.06	4.18
1% of Market share	5.29	5.41	5.57

Based on the simple model, we can project revenues of around USD 4 million in a median scenario if we capture somewhere between 0.75% to 1% of the total market share. The results from the other scenarios are also shown.

Marketing

Marketing that will play a large role in determining the performance of this project. IGSL has an important role to play in formulating and co-ordinating the marketing strategy for the venture. A proposed marketing plan is laid out below with responsibilities for each of the three parties:

IGSL will:

• Formulate marketing strategies, budgets and advise on participation in fairs, trade events and designer events.

• Consult in planning events with dealers and designers in various cities periodically along with BEPS. Furthermore, IGSL will visit India two to three times per year.

• Train and guide dealers on selling end to end solutions to designers and clients. IGSL will also consult on costing, renders, installation and the entire order cycle alongside BEPS.

• Arrange travel to China (including hotels, etc.) and factory tours for “A-grade” dealers and/or for top end clients.

• Help source products which Huayi cannot supply and help in providing client with an end to end solution.

BEPS will:

• Appoint marketing personnel. The size of the marketing team shall have to be worked out.

• Provide local support to dealers and visit them periodically to promote sales, receive feedback, and address concerns.

• Social media marketing on various social media networks. The costs have to be worked out and shared between parties.

Huayi will:

• Appoint a dedicated person for projects in India.

• Provide designs, costing and 3D renders along with marketing materials such as catalogues and selected physical samples.

• Huayi will visit India alongside IGSL to assess the market, visit BEPS and dealers around twice a year.

• IGSL and BEPS should be named as official partners for the Indian market on Huayi’s website, their catalogues and their industry events such as fairs, etc.

Cost sharing and other tasks such as providing incentives to designers and dealers have to be jointly negotiated alongside the marketing budget for events, visits and promotions. The marketing strategy should also be reviewed yearly by all parties along with other business targets.

Standard operating procedure

Apart from marketing, the business strategy has to be laid out. We present an outline of a working model and business strategy that can be further iterated upon by all parties below.

With regards to dealers and dealerships, we must:

• Choose good dealers in A and B grade cities. For this, BEPS should provide leads from their existing dealer network and all parties can jointly visit them for a final assessment.

• Provide dealers with iPads (or something equivilent) with pre-loaded marketing materials such as profiles of BEPS, Huayi, and IGSL along with catalogues which show the combined portfolio of Huayi and BEPS. Dealers also have to be provided with some samples and physical catalogues.

• Create branded shelf space in dealerships with physical samples of some products for display purposes.

• Train dealers on how to approach designers & high end clients in their cities. The types of projects will typically be villas, high-end flats, upcoming hotels, restaurants and cafés, stores in shopping malls, etc.

After dealers make the initial pitches to clients, BEPS and IGSL should guide them to finalise client requirements. If the order is large, then the BEPS marketing team should visit the client alongside the dealer. The specifics of the order should then be passed to Huayi via IGSL.

With regards to sourcing, logistics and manufacturing:

• Huayi should provide a quote for orders within two to three days to IGSL in USD. Huayi’s quotes will have to be competitive with other comparable products.

• The final quote to the client in Indian rupees should be delivered by BEPS and the dealer. The order should then be passed to IGSL.

• IGSL will co-ordinate with HY on arranging drawings, 3D renderings as per the client’s requirements. Once drawings, samples and colour swatches are confirmed, Huayi will arrange production and meet delivery deadlines.

• IGSL will work out the logistics, custom clearances, delivery to site and handle any modifications to the order.After the goods have been delivered to the site, BEPS shall take over the installation

• If issues arise during production (for example, design changes, colours, etc.), IGSL shall co-ordinate with Huayi and BEPS to get them resolved in a timely manner so that delivery is not adversely affected.

• Payments should be arranged should be arranged as defined in the order contracts. After installation, the project should be photographed so that it can be signed off on and catalogued.

• A warranty letter should be given to the client. The terms of the warranty should be defined in a contract through Huayi and BEPS.

The above is just a rough outline of a business strategy and a working model. These procedures should me modified in consultation with all parties and should be reviewed regularly.

The channel partnership should be pursued for a minimum of three years initially and reviewed afterwards. A formal contract should be signed and disputes should be resolved in Hong Kong in accordance with Hong Kong’s arbitration ordinance.